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Mr. Gerdes AP Macroeconomics The Circular Flow of Economic Activity

Mr. Gerdes AP Macroeconomics The Circular Flow of Economic Activity. Circular Flow Concepts. Product Market – where goods and services are exchanged. Households – suppliers of the factors of production & demanders of goods and services.

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Mr. Gerdes AP Macroeconomics The Circular Flow of Economic Activity

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  1. Mr. GerdesAP MacroeconomicsThe Circular Flow of Economic Activity

  2. Circular Flow Concepts Product Market – where goods and services are exchanged Households – suppliers of the factors of production & demanders of goods and services Government – providers of public goods and services & demanders of both private goods and services and the factors of production Businesses / Firms – suppliers of goods and services & demanders of the factors of production Factor Market – where the factors of production are exchanged

  3. Product Market <<<<Goods and Services <<<< >>>$ Household Spending $>>> <<<goods & services<<< <<<public goods<<< >>$ government spending $>> >>$ taxes $>>> >>>public goods>>> >>>factors of production>>> <<$ taxes $<< <<$ factor payments $<< Government Businesses / Firms Households <<<$ Rent, wages, interest & profits $<<< >>>> Land, labor, capital & entrepreneurship >>>> Factor Market

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